Blog Visitors' CommentsCondo Search's comment..
I just drop by to say "thank you" for your excellent blog, and safe me from committing at a high price and wrong time buying. It helps me a small property hunter(with hard earning money) and others(i believed)a better inform. Thank you again...

Young Buyer's comment...
I've just graduated and started working, and I hope to own a residential property in Singapore after 2010/2011. So I'm starting to do my Singapore property research now. I have never come across such a comprehensive coverage on the Singapore property market, and I thank you for enlightening readers like me who want to know more :) Keep up the good work!

Young Expat's comment...
i am an overseas expat who moved to singapore a year ago and started looking out recently for property to buy as rentals started to rise all around me..i was advised to follow ur forum and since then have been impressed with all the wonderful tips exchanged in this portal..thanks to all the contributors.(Smart Buyer, the blogger here, would like to say many thanks to all these unsung heroes too)

Red's comment...
I think your reply give a rational explanation on my question. You are indeed a smart buyer and very knowledgeable.

Kate's comment...
This is a great blog filled with latest news, historical insights and good opinions that gives direction. Not the sitting on the fence type of 'pc' opinions. I love this blog. Please keep up the good work! You are really doing Singaporeans a big favour! Thank you!! I will keep on reading.

Phantasia's comment ...
Hi smart buyer,
Just wanna say thanks for your response to my query earlier in another post. And also for the very informative blog! Have learnt much from your postings! Thanks for sharing.

Smart Buyers, 10 reasons to waitFear that property price will go up forever? Here are 10 reasons to consider before you make that big commitment.......Posted by Smart Buyer(This post contains the 10 reasons that Smart Buyer first wrote for himself in mid 2007 when the property market was in a runaway euphoria, which he subsequently posted on this blog for all property buyers to consider. The arguments are supported by official data and illustrated with property supply and property price index graphs.)

Bad investments are made in Good Times
Looking at the subprime problem, it is definitely a bad news that will take time to filter down. The falling US$ is another problem that will hit the US economy. China and HK property and share mkt are 2 big bubbles.. Beware !!...Posted by km(This post contains km's first-person account of the 1998's property market crash and all the troubles that came with it - soaring mortgage rate, vacant properties with no available tenants, banks pressing for top-ups as property valuation dropped, ... his story has a happy ending of course. He'd share with you openly the lessons learnt.)

Solvency Worries STALK CREDIT-DERIVATIVES MARKET. They are now talking of SOLVENCY, not just LIQUIDITY issue .......it's really quite serious now....Posted by AnonymousHaving a house which has a big loan is a liability at this global trouble time.So far the market is still moving down slow due to the reason that many of the countries are injecting funds to buy part of the share of the banking market. The negative news continues to rise. The money is better leave in CPF and local banks to grow interests....Posted by Anonymous

During the 1995 -1998 period, the same scenerio arise..Many people cant get the HDB flat. There was the ballot system and it is just like "ti-kam", 1 out of 8 can get to buy. Due to this flocked system, many people, including those who are not so keen buyer also join the Q, paying $10 as a ballot fee, when they get balloted, then ......Posted by Anonymous

This market is definitely driven by greed and liquidity.I have never seen anything like it in my lifetime. Property prices goes up as fast a the stock market. This market is definitely driven by greed and liquidity in the asian market. What goes up must come down!...Posted by rob-502

Your Property Investment Decides Your Financial SuccessYour Property Investment may be the sole determinant of your financial success in life. One wrong move,......Posted by Smart Buyer (This post contains Smart Buyer's first-person account of the 1990's boom and bust, and how investment opportunities presented themselves in the market crash of 1998 and 2006.)

Monday, December 8, 2008

It used to be that one could never lose out buying a new HDB flat from the Government. It was a sure-win bet to a better life for many as they sold their flats for windfall gains after five years, as allowed under HDB rules, and upgraded to newer or bigger and nicer homes. This, however, may no longer be the case these days.

New HDB flats are subsidised and priced below those of resale flats in the same area. But there has been a shift in the market cycle, and the HDB resale market is seen heading south because of the current recession. ‘This is more or less the peak for HDB flat prices,’ said C&H Realty managing director Albert Lu.

New HDB flats not a safe bet as seen in 1996 Peak

While new flats have always been a safe bet, some who bought or are buying them now may find themselves with a paper loss soon.

The situation is similar to that in the previous 1996 peak. Back then, those who bought new flats in the new town of Sengkang found themselves ‘under water’ a few years later, said Mr Eugene Lim, an associate director of ERA Asia Pacific. The prices they paid were higher than those of resale flats in the area.

Experts say that as the HDB resale market slowly inches down, this scenario may present itself again. ‘Those who buy new flats when resale prices are high may have a higher probability of losing out,’ said Mr Leong Sze Hian, president of the Society of Financial Service Professionals.

‘In contrast, those who buy when resale prices are low may have a higher probability of a price appreciation. So, maybe a balanced cost-approach pricing may be better instead of market subsidy.’

Cost-Approach Pricing for HDB New flats

The balanced cost-approach is based on pricing the cost of building the flats. It will give rise to more stable prices that reflect inflation and wage increases, he explained.

Buyers of new build-to-order flats will have to wait about three years, by which time the market may have changed completely. They may end up in a position where their new flat’s price is similar or higher than resale prices, MrLu said.

Experts, though, are quick to add that it will be only a paper loss, if any. ‘If you don’t sell your flat, you will not see any loss,’ explained ERA’s Mr Lim. ‘There is a downside risk to buying a new flat, but it is very small.’

In any case, buyers of new flats have to occupy their units for at least five years before they can sell them. Many often continue to live in them for years after that, experts say.

HDB flats capital appreciation likely be smaller than in the past

In the next five to 10 years, if the world economy strengthens, the next peak for HDB flat prices may be higher than where they are right now, said Mr Lu.

There is, therefore, the possibility of a capital appreciation, but any gains will likely be smaller than before, since today’s buyers are paying a lot more for their HDB flats.

‘It’s no longer the $100,000 to $200,000 types of gains that were easily attainable in the past,’ said Mr Lim.

Mr Lu said that for those seeking a new flat to live in, it would not really matter when they buy. If they were to buy high and sell low, they would also be able to buy a replacement home at a low price, he pointed out.

Ultimately, new HDB flats remain the cheapest form of housing in Singapore.

Still, buyers have to work out their sums first.

Regardless of the economic situation or any potential capital appreciation gains, the key is to buy a flat that one can afford, experts advise.

1 comments:

Anonymous
said...

haha...I think it's another bullshit advice by agents, basically agents don't gain any commission from sales of new HDB flats...")

I think price of HDB is very affordable, and any price drop (if any) will be minimal. It's not possible to compared to 1996 scenario as the fundamental of HDB markets has been strengthen since then... :) but only for the experience to understand, not everyone is smart and success in this world :)

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The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.